When Alaska Sen. Ted Stevens was voted out of office amid scandal last November, Alaska Natives lost a good friend. Now there's talk on Capitol Hill of reconsidering some of the federal contracting preferences enjoyed by Alaska Native corporations (ANCs). They have responded with a letter-writing campaign to keep those benefits and find a few new friends in Congress.
Stevens, a Republican, helped write the Alaska Native Claims Settlement Act, which was signed into law in 1971. It established more than 200 ANCs and gave them nearly $1 billion.
The goal was to lift Alaska Natives out of poverty, but many of the ANCs foundered. So the Alaska delegation — led by "Uncle Ted," as some Alaskans call the former senator — pushed a series of bills through Congress, providing them with special tax benefits and federal contracting preferences.
Today, ANCs are allowed to participate in the Small Business Administration's 8(a) contracting program for disadvantaged businesses, even though some ANCs have thousands of employees and hundreds of millions of dollars a year in revenue.
"I'm a perfect example of the success of the 8(a) Program and what it means for native communities and native people," said Sarah Lukin, vice president of external relations for Afognak Native Corp. "I grew up very poor, and it was through scholarships from my native corporation that I was able to go to college. And my sisters and I were the first in my family to ever earn college degrees."
Defending Special Preferences
These days, part of Lukin's job is to defend the special preferences ANCs have acquired over the years as the chorus of critics grows.
"There's got to be a time period when the subsidy ends," said Barbara Hennessy, president of Command Decisions Systems and Solutions Inc., a consulting firm that both competes with and sometimes partners with ANCs for federal contracts.
Hennessy's biggest complaint is the sole-source contracting benefit given to ANCs. That means a federal agency can go directly to an ANC without the hassle of a competitive bidding process.
Hennessy says federal agencies find the convenience irresistible.
"Instead of dealing with 65 bidders, they're dealing with one sole source. That's a very hard thing to compete with," she says.
A 2006 Government Accountability Office report concluded that an Army contract for security guards awarded to an ANC company cost the government 25 percent more than if the contract had gone through the competitive bidding process.
But this isn't just about saving money, according to Karen Atkinson, executive director of the Native American Contractors Association. The federal government has a duty to help natives who gave up their rights to millions of acres of land.
"Part of that includes self-determination and economic self-sufficiency, and so the federal government does have an obligation to support policies that will promote both of those values and principles," said Atkinson.
'A Duty To Native Alaskans'
Most critics won't argue that the federal government owes something to Native Americans; they just don't think preferences in federal contracting are the way to repay that debt.
"If the government believes it has a duty to native Alaskans, then Congress should appropriate whatever amount of money to the individual Alaskans that they believe the duty entails," said Steven Schooner, co-director of the Government Procurement Law Program at George Washington University.
Schooner says mixing social policy with the federal procurement system is inefficient, but he understands why lawmakers do it.
"The true cost of the programs is invisible," Schooner said. "Nobody has to budget the subsidy to the Alaska Native population that's basically skimmed off the top of the procurement process."
Some on Capitol Hill, such as Rep. Henry Waxman (D-CA), have expressed interest in reforming the contracting preferences for ANCs in the past. There's talk of bringing up the issue again — but no hearings have been scheduled and no bills have yet been introduced.